Open Access

Navid Sabet, Christoph Winter

• Highlights • The 1986 Immigration Reform and Control Act legalized millions of Hispanic migrants. • The IRCA receive significantly increases state-to-county fiscal transfers. • Electoral incentives of the state governor drive the fiscal response of the IRCA. • Legalization increases Hispanic turnout and political engagement. Abstract We study the impact of immigrant legalization on fiscal transfers from state to local governments in the United States, exploiting variation in legal status from the 1986 Immigration Reform and Control Act (IRCA). State governments allocate more resources to IRCA counties, an allocation that is responsive to the electoral incentives of the governor. Importantly, the effect emerges prior to the enfranchisement of the IRCA migrants and we argue it is driven by the IRCA’s capacity to politically empower already legal Hispanic migrants in mixed legal status communities. The IRCA increases turnout in large Hispanic communities as well as Hispanic political engagement, without detectably triggering anti-migrant sentiment.